Guatemala earned the distinction of being the first country outside of the United States to sue tobacco companies when it filed suit on May 12, 1998. The Attorney General of Guatemala, Acisclo Valladares, who filed the suit, is seeking damages of at least $800 million dollars to recover the cost of treating smoking-related illnesses in Guatemala. The suit alleges that tobacco companies "have conspired to conceal the truth about their tobacco products ... for the sole purpose of ... maximizing their profits to the detriment of and at the expense of every user of their tobacco products." Guatemala is suing the companies that have a hold of the country's cigarette market: namely, Philip Morris, Brown and Williamson, the Liggett Group, B.A.T. Industries, British American Tobacco Company and Batus Holdings.

FOR THE DISTRICT OF COLUMBIA

THE REPUBLIC OF GUATEMALA,

Plaintiff,

v.

THE TOBACCO INSTITUTE, INC., 1875 I Street NW, Suite 800, Washington, D.C. 20006;

THE COUNCIL FOR TOBACCO RESEARCH-U.S.A., INC. (SUCCESSOR TO TOBACCO INSTITUTE RESEARCH COMMITTEE), 900 3rd Avenue, New York, New York 10022;

B.A.T. INDUSTRIES, PLC, Windsor HO, London, England SW1H ONL;

BRITISH AMERICAN TOBACCO CO., LTD., Millbank, Knowle Green, Staines, Middlesex, England TW181DY;

BATUS HOLDINGS, INC., 1500 Brown & Williamson Tower, Louisville, Kentucky 40202;

BROWN & WILLIAMSON TOBACCO CORPORATION, 1500 Brown & Williamson Tower, Louisville, Kentucky 40202;

PHILIP MORRIS COMPANIES, INC., 120 Park Avenue, New York, New York 10016;

PHILIP MORRIS INCORPORATED, 120 Park Avenue, New York, New York 10016; and

LIGGETT GROUP, INC., Main & Fuller Streets, Durham, North Carolina 27702,

Defendants.

CIVIL ACTION NO. __________

JURY DEMANDED

COMPLAINT

I.

INTRODUCTION

For decades, Defendants, the primary manufacturers and distributors of cigarettes and other related tobacco products, have controlled virtually the entire tobacco market in the Republic of Guatemala.

2. For decades, Defendants were aware of and used to their collective advantage the addictive nature of nicotine contained in their tobacco products that caused millions of Guatemalans to fall victim to their nicotine-filled tobacco products.

3. For decades, Defendants were aware of the harmful and deadly effects created by their tobacco products on the health and welfare of the millions of Guatemalan users of their tobacco products. Cigarettes and other tobacco products have caused and/or created various diseases that have killed, injured, and continue to kill and injure untold numbers of citizens of the Republic of Guatemala.

4. For decades, Defendants have conspired to conceal the truth about their tobacco products, information known to Defendants regarding the health risks associated with and caused by their tobacco products, for the sole purpose of ensuring, maintaining, and maximizing their profits to the detriment of and at the expense of every user of their tobacco products.

5. For decades, Defendants' conduct has caused an incalculable loss of life, disease, disability, pain, suffering, illness, and economic loss not only for the users of Defendants' tobacco products, but on Plaintiff provides medical assistance to the users of Defendants tobacco products, as well as their dependents, which cost was ultimately borne by the Plaintiff.

6. For decades, the Defendants purposefully and intentionally manufactured, tested, designed, promoted, marketed, packaged, sold, distributed, and/or placed into the stream of commerce into and through the Republic of Guatemala, numerous brands of defective, unreasonably dangerous and hazardous cigarettes, or other tobacco products, or, in the course of business, materially participated with, conspired with and/or otherwise aided, abetted and assisted others in so doing.

7. At all pertinent times, the Defendants purposefully and intentionally engaged in these activities, and continue to do so, with full knowledge and understanding that the Republic of Guatemala's residents used those cigarettes and tobacco products as intended by Defendants to be used, that the Republic of Guatemala's residents would be substantially certain to suffer disease, injury and sickness, including cancer, emphysema, heart disease and other illnesses causing disability and death and that the Plaintiff, the Republic of Guatemala, would be economically injured as a direct consequence of Defendants' actions.

8. The Defendants have embarked on a conspiracy of deceit and misrepresentation against Plaintiff and other governmental entities that bear responsibility for the public health. The intended purpose and effect of such concealment has been to thwart and delay aggressive measures by Plaintiff and other governmental entities to reduce tobacco use. Because of Defendants' material non-disclosures and misrepresentations, Plaintiff and other public health authorities lacked complete information regarding the effects of smoking on health, the relationship between nicotine and addiction, and the manipulation of levels of nicotine addiction to ensure addiction. As a result, Plaintiff as well as public health agencies relied on false or incomplete information in not taking, or in delaying, actions to discourage and reduce cigarette use. As a result of such reliance, Plaintiff failed to take or failed to promptly take actions to more appropriately treat smoking-related injuries and diseases as well as to discourage and reduce cigarette use, and the costs associated therewith, by residents of Guatemala.

9. Furthermore, Defendants knowingly and willingly engaged in and continue to engage in this misconduct, with full knowledge that the Plaintiff would provide and/or pay for the health care as well as other necessary medical devices, procedures and costs to its residents, injured by the intended use of Defendants' tobacco products, thus conferring a benefit on Defendants.

10. The cigarettes and other tobacco products manufactured, distributed and/or marketed by Defendants are substantially interchangeable.

11. The legal and factual issues for determining the liability of each of the Defendants involve substantially similar issues.

12. For decades, Defendants have profited greatly knowing their profits derived from the pain and misery suffered by the users of their tobacco products, as well as those around them, and Plaintiff seeks reimbursement of the funds expended on behalf of those injured by and addicted to Defendants' tobacco products.

II.

PARTIES

A.

PLAINTIFF

Plaintiff, the Republic of Guatemala ("Guatemala"), is a sovereign nation. Guatemala maintains its primary consular offices in the United States at 2220 R Street, NW, Washington, D.C. 20008.

B.

DEFENDANTS

The Tobacco Institute, Inc., is a non-profit corporation organized under the laws of the State of New York with its principal place of business located at 1875 I Street NW, Suite 800, Washington, D.C. 20006.

15. B.A.T. Industries, PLC, is a British corporation with its principle place of business at Windsor HO, London, England SW1H ONL. British American Tobacco Co., Ltd. is or was a subsidiary or division of B.A.T. Industries, PLC.

British American Tobacco Co., Ltd. ("BATCO"), is a British corporation whose principal place of business is Millbank, Knowle Green, Staines, Middlesex, England TW181DY. Brown & Williamson Tobacco Corporation is or was a subsidiary or division of British American Tobacco Co., Ltd.

Batus Holdings, Inc., is a Delaware corporation with its principal place of business at 1500 Brown & Williamson Tower, Louisville, Kentucky 40202. Batus Holding, Inc., is a subsidiary of B.A.T. Industries PLC. Batus Holdings, Inc. is or has been the parent corporation of Brown & Williamson Tobacco Corporation and has participated in the manufacture and distribution of cigarettes and other tobacco products both individually and through its agent and alter ego the defendant Brown & Williamson.

Brown & Williamson Tobacco Corporation, is a Delaware corporation whose principal place of business is located at 1500 Brown & Williamson Tower, Louisville, Kentucky 40202. Brown & Williamson Tobacco Corporation is or was a subsidiary or division of Batus Holdings, Inc., and is a subsidiary or division of B.A.T. Industries PLC.

Philip Morris Companies, Inc., is a Virginia corporation whose principal place of business is located at 120 Park Avenue, New York, New York 10016. Philip Morris Companies, Inc., is the parent corporation of Philip Morris Incorporated and has participated in the manufacture and distribution of cigarettes and other tobacco products both individually and through its agent and alter ego the defendant Philip Morris Incorporated.

Philip Morris Incorporated, a subsidiary of Philip Morris Companies, Inc. is a Virginia corporation whose principal place of business is located at 120 Park Avenue, New York, New York 10016.

Liggett Group, Inc., is a Delaware corporation whose principal place of business is located at Main & Fuller Streets, Durham, North Carolina 27702, and has participated in the manufacture and distribution of cigarettes and other tobacco products both individually and through its agent and alter ego the defendant Liggett & Myers, Inc.

The Council for Tobacco Research--U.S.A. Inc. (successor in interest to the Tobacco Institute Research Committee) is a non-profit corporation organized under the laws of the State of New York with its principal place of business located at 900 3rd Avenue, New York, New York 10022.

III.

JURISDICTION

Jurisdiction is proper in this Court pursuant to 28 U.S.C. S 1331 and S 1337 because this matter involves allegations of anti-competitive behavior arising under the laws of the United States, in addition to violations of the Federal Racketeer Influenced and Corrupt Organization Act. Furthermore jurisdiction in this Court is proper pursuant to the Racketeer Influenced and Corrupt Organization Act ("RICO"). 18 U.S.C. SS 1964(a) and (c). Plaintiff is a "person" within the meaning of 18 U.S.C. 1961(3). Finally, this Court may exercise jurisdiction over Plaintiff's non-federal claims pursuant to 28 U.S.C. S 1367 as this Court has both federal question and alienage jurisdiction. Alternatively, jurisdiction is also proper in this Court pursuant to 28 U.S.C. S 1332(a)(4) as this suit is between the Republic of Guatemala, a foreign State, and Defendants who are citizens of different states and the amount in controversy exceeds $75,000.00.

IV.

VENUE

Venue is proper in this Court pursuant to 28 U.S.C. S1391(b)(2) as a substantial part of the events and/or omissions giving rise to the claim occurred in the District of Columbia. A significant portion of the conspiracy and other unlawful activity described below, engaged in by Defendants, occurred in this District. Venue is also proper in this Court pursuant to 28 U.S.C. S1391(d) because a foreign corporation may be sued in any district. Additionally, venue is proper in this Court under RICO pursuant to 18 U.S.C. S 1965 because a defendant is located and has its principle place of business in this district, other defendants have agents, or transact their affairs in this district and justice so requires. Alternatively, venue is proper in this Court pursuant to 28 U.S.C. S1391(a)(2).

Pursuant to a treaty between the United States and Guatemala, Plaintiff is to be accorded equal treatment in United States courts. General Convention of Peace, Amity, Commerce, and Navigation, March 3, 1949, U.S.-Guatemala, art. XII, 10 Stat. 875, 878, TS 149, 8 Bevans 461.

V.

AUTHORITY TO FILE ON BEHALF OF GUATEMALA

The Procurador General de la Nación (Attorney General) of Guatemala and lawyers properly retained by him are filing this suit on behalf of the Republic of Guatemala. The Attorney General has the exclusive authority under the Constitution of the Republic of Guatemala to file this action and seek reimbursement for all costs and damages incurred by the Republic of Guatemala. The Attorney General has complied with and is acting in full accord with the laws of Guatemala in filing this action.

VI.

DEFENDANTS' MISCONDUCT

Tobacco use kills approximately three million people worldwide each year. It is estimated that if current smoking patterns continue, nearly one-tenth of the world's population will be wiped out by tobacco related diseases. This is over 300 million of today's children and teenagers, two-thirds of them in the developing world. Cigarette and tobacco related deaths account for a significant portion of the mortality in Guatemala.

The highest rates of cigarette consumption have shifted dramatically since the 1970s as the transnational tobacco corporations have increasingly turned to emerging regions of the world for profits. While consumption of cigarettes in the U.S. is declining by 1.5 percent per year, it is rising in developing countries by 1.7 percent annually.

Despite the known harmful effects which their products cause, Defendants have engaged in a marketing conspiracy designed to mislead the public in Guatemala in much the same way as has occurred in the United States. The multi-national defendant cigarette manufacturers have not only exported their addictive product, but also their sophisticated and extremely effective advertising and promotional techniques. These techniques were developed and designed in the United States by Defendants to be uniform and therefore provide worldwide product identification. For example, the Marlboro brand cigarette marketed by Defendant Philip Morris, uses the same advertising slogans and designs throughout Guatemala and other parts of Latin America as used in the United States. "Marlboro Man" or "Marlboro Country" advertisements identical to those found in the United States are located throughout Guatemala City, Guatemala.

Defendant Philip Morris controls 72.5% of the Guatemalan cigarette market through its wholly owned subsidiary Tabacalera Centroamericana, S.A.. Defendant BATCO controls 22.5% of the Guatemalan cigarette market through its wholly owned subsidiary Tabacalera Nacional, S.A.. Thus, the entire Guatemalan cigarette market is controlled by these two Defendants. Defendant Liggett previously marketed cigarettes in Guatemala but sold the rights to market its brands to Philip Morris which now acts on its behalf. Tabacalera Centroamericana, S.A., is controlled and operated by Defendant Philip Morris and shares unity of ownership and interest with Philip Morris and has been used to perpetuate the fraud and wrong alleged herein. Tabacalera Nacional, S.A., is controlled and operated by Defendant BATCO and shares unity of ownership and interest with BATCO and has been used to perpetuate the fraud and wrong alleged herein.

Apart from the actual physical and health damages caused by Defendants' products and misconduct, the economic damages suffered by Plaintiff is equally alarming and staggering. In Guatemala, substantial amounts of money have been expended to aide those suffering from tobacco-related injuries such as tobacco-induced cardiovascular disease, lung cancer, other cancers, emphysema, other respiratory diseases as well as the complications of pregnancy and childbirth, including but not limited to low-weight babies.

For decades, Defendants knew of the harmful and deadly effects of tobacco. As early as the late 1930's, based on published research, Defendants had notice of the potential health hazards presented by smoking cigarettes. In 1946, Defendants' chemists themselves reported concern for the health of smokers. A report in 1953 by Dr. Ernst L. Wynder heralded to the international, scientific community, as well as to Defendants, a definitive link between cigarette smoking and cancer. In these tests, researchers painted condensed, puffed smoke onto the backs of mice. As a result thereof, the mice grew cancerous tumors. While previous statistical and epidemiological studies had indicated a relationship between smoking and cancer, Dr. Wynder's study was the first conclusive biological study in this regard.

Although Defendants were armed with the knowledge of the carcinogenic nature and effect of cigarettes and tobacco products, Defendants knowingly, intentionally, and willingly attempted to and succeeded in suppressing such scientific data. For example, although Defendant Liggett refused to publicly acknowledge the viability of the research conducted by Dr. Wynder, Defendant Liggett contracted its own study based on Dr. Wynder's research. The studies conducted by the independent consulting firm of Arthur D. Little, Inc., at the request of Defendant Liggett, duplicated the research previously conducted by Dr. Wynder and reached essentially the same conclusions. Based on the results of the research conducted by Arthur D. Little, Inc., the consulting firm requested the permission of Defendant Liggett to publish its research results. Defendant Liggett refused the request to publish and effectively quashed the publication or dissemination of those research results.

There is virtually no disagreement, based on the scientific evidence and research such as that conducted by Dr. Wynder and through the present, that smoking is a significant cause of cancer in Guatemala. Additionally, the scientific consultants for the tobacco industry are aware of and have accepted the evidence that indicates smoking is a significant cause of cancer.

Armed with the knowledge that there have been over 40 carcinogens identified in cigarettes, Defendants knowingly, willingly, and intentionally "supplemented" their tobacco products by adding additional ingredients and/or chemicals to their tobacco products. In fact, the Defendants have added so many "supplements" to their tobacco products that approximately 8% of the weight of the tobacco in a cigarette is from Defendants' additives.

Not only have known carcinogens been found in cigarettes, there have been several thousand chemical compounds identified in cigarette smoke. A few of the compounds identified in cigarette smoke are: carbon monoxide, nicotine, carbon dioxide, benzene, formaldehyde, Polonium-210, ammonia, nicotine sulfate, freon 11, hydrogen cyanide and certain liver toxins known collectively as "furans."

One of Defendants' main additives is nicotine, which is recognized by major medical organizations such as the World Health Organization, U.S. Surgeon General's Office, American Medical Association, American Psychiatric Association, American Psychological Association and the American Society of Addiction Medicine, as being an addictive substance. Nicotine addiction creates not only a psychological or behavioral addiction, it involves a physical alteration of the user's brain structure and functioning, which manifests in a physical necessity for nicotine. The Defendants are aware of the propensity for addiction caused by nicotine and Defendants capitalize on this information to exploit the users of their tobacco products.

For decades, Defendants have known of and capitalized on the addictive properties of nicotine. In 1972, an internal tobacco industry memorandum acknowledged that "[w]ithout nicotine ... there would be no smoking ... the cigarette [is] a dispenser for a dose unit of nicotine." Nicotine addiction guarantees a market for Defendants' cigarettes and tobacco products. The addictive nature of the nicotine in cigarettes virtually extinguishes personal choice in those who became addicted. Many smokers, if not most, fail in their attempt to quit smoking and defeat their nicotine addiction. Nicotine addiction is so strong for many who smoke that, following a heart attack or lung cancer surgery, approximately 50% of those who survive return to smoking. Further, 40% of the smokers who have had their larynxes removed return to smoking afterwards.

Defendant BATCO produced documentation which indicates as early as 1961, the tobacco industry was aware of the physiological and physical effects of nicotine on smokers. The reports conducted by Defendant BATCO were distributed to other Defendants which include the Tobacco Institute ("TI") and the Tobacco Institute Research Committee ("TIRC") (The Council for Tobacco Research--U.S.A. Inc., ("CTR") is the successor in interest of the TIRC).

In 1962, Defendant Brown & Williamson's parent company conducted a worldwide meeting for all of its subsidiaries. At that meeting, one of the researchers stated "smoking is a habit of addiction" and "[n]icotine is not only a very fine drug, but the technique of administration by smoking has considerable psychological advantages." In 1963, Addison Yeaman, general counsel at Defendant Brown & Williamson, wrote "[w]e are, then, in the business of selling nicotine, an addictive drug." Later, in 1967, the researcher who made the statements in the 1962 meeting made yet another concession and admitted that the company "is in the nicotine rather than the tobacco industry."

In 1972, Defendant Philip Morris published an internal report clearly identifying the nicotine contained in their tobacco defines their product:

As with eating and copulating, so it is with smoking.

The physiological effect serves as the primary incentive; all other incentives are secondary. The majority of the conferees would go even further and accept the proposition that nicotine is the active constituent of cigarette smoke. Without nicotine, the argument goes, there would be no smoking.

Why then is there not a market for nicotine per se, to be eaten, sucked, drunk, injected, inserted or inhaled as a pure aerosol? The answer, and I feel quite strongly about this, is that the cigarette is in fact among the most awe-inspiring examples of the ingenuity of man. Let me explain my conviction.

The cigarette should be conceived not as a product but as a package. The product is nicotine.

Think of the cigarette pack as a storage container for a day's supply of nicotine....Think of the cigarette as a dispenser for a dose unit of nicotine.

42. In August of 1995, the U.S. FDA, located in Washington, D.C., published Nicotine in Cigarettes and Smokeless Tobacco Products and described in detail the techniques used by Defendants to control the amount and concentration of nicotine, similar to any other drug manufacturer:

. . . cigarette manufacturers manipulate and control the delivery of nicotine in marketed products. Cigarettes are designed to supply nicotine at consistent levels despite the wide variations in the nicotine levels of the raw materials, the immensely complicated combustion chemistry, and the complex chemical flow properties of a modern cigarette.

Manufacturers use many techniques to control nicotine deliveries. The application of these modifications in cigarette design and their interactive nature pose complex problems in maintaining brand uniformity and consistency regarding nicotine delivery. Yet, the nicotine content and delivery of each brand of cigarettes is remarkably consistent from batch-to-batch and year-to-year. This level of control is analogous to that of the pharmaceutical industry in the production of prescription drugs. In fact, to determine how well nicotine content is controlled in cigarettes, FDA laboratories compared the content uniformity of drugs in tablet or capsule form to the content uniformity of nicotine in cigarettes The results showed that nicotine content varies from cigarette to cigarette no more than the content of active ingredients in marketed pharmaceuticals.

43. Further, this report identified and detailed the methods used by Defendants to increase the level of nicotine in low-tar (low-yield) cigarettes and other products to ensure the physiological and psychological effects of the nicotine were maintained by the users:

FDA's investigation has also disclosed that the tobacco industry uses a number of methods to boost nicotine delivery in low-yield cigarettes. The cigarette industry has successfully used these methods to maintain adequate nicotine delivery from low-yield products. Without the independent manipulation of nicotine, many of the techniques used to reduce tar would also substantially reduce nicotine. Instead, regardless of differences in labeled/advertised FTC, nicotine yields and manufacturers' claims of low-nicotine delivery for certain brands, all cigarettes contain approximately the same amount of nicotine in the rod, and deliver about 1 mg of nicotine, enough to produce pharmacological effects. Moreover, studies by FDA and others have demonstrated that the lowest-yield cigarettes have the highest concentrations of nicotine demonstrating that nicotine delivery has been independently manipulated.

The tobacco industry's control and manipulation of nicotine delivery from cigarettes provides additional evidence of the industry's intent to deliver pharmacologically satisfying levels of nicotine to smokers.

44. The report issued by the U.S. FDA headquarters in Washington, D.C., continued and noted that, while the Defendants were able to reduce the "tar" from cigarettes, the level of nicotine remained constant, indicating that Defendants had precise control over every ingredient contained their products. One of the ways utilized by the Defendants to control the level and potency of nicotine in their products is careful breeding and blending:

The industry's control and manipulation of nicotine in the production of cigarettes begins long before the cured tobacco leaf reaches the manufacturing plant. The characteristics of leaf tobacco, including nicotine content, are established by the genetic makeup of the plant, developed during growing, and fixed by post-harvest handling. Like other raw agricultural commodities, the physical and chemical properties of tobacco, including nicotine, can vary widely, depending on genetic differences, growing season conditions, and soil type. The tobacco industry uses these differences to control and manipulate nicotine through careful genetic breeding and agronomic practices.

Modern types of cultivated tobacco (Nicotiana tabacum L) have been selected for a relatively high level of nicotine. Five major types of tobacco make up nearly all tobacco products marketed in the United States: Burley, flue-cured, Maryland, the Dark tobaccos, and Oriental. These tobaccos vary both in nicotine levels and in pH. The pH of a tobacco can have a significant influence on the amount of, and rate at which, nicotine is absorbed into the bloodstream of the tobacco user and delivered to the brain.

American tobaccos of all types have undergone cumulative increases in total nicotine levels since the 1950s. Nicotine levels in the most widely grown American tobaccos increased almost 10 percent for Burley and more than 50 percent for flue-cured between 1955 and 1980.

According to the FDA, two tobacco industry activities over the last several decades appear to be responsible for this increase: (1) the industry's active and controlling participation in the Minimum Standards Program which ensures that nicotine levels of U.S. grown and marketed tobacco are maintained within specified ranges; and (2) the industry maintains control over which varieties are suitable for growing in the United States and thereby eligible for price support.

One key objective of the tobacco industry's involvement in the Minimum Standards Program appears to be to ensure that nicotine levels in marketed tobacco do not fall below specified levels. The program was initiated in response to the emergence, in the 1950s, of several so-called discount varieties of tobacco (e.g., "Coker 139," "Coker 187-Golden Wilt," "Coker 282" "Coker 140," "Coker 316," and "Reams 64") that failed to meet industry specifications established, among other things, to control the amount of Nicotine delivery when used in manufacturing filtered cigarettes. To insure the elimination of "discount" or low-nicotine varieties from the market, the industry arranged with the USDA to eliminate these varieties from the price-support program. In fact, to be eligible under this program, growers must certify, even to this day, that "discount" varieties are not being grown.

In the 1960s and 70s, the industry worked with tobacco breeders to develop tobacco varieties that produced less tar. The industry found that without intervention in the breeding of these varieties, nicotine levels were reduced along with tars. Thus, the industry has long been able to grow low-tar and low-nicotine varieties of tobacco for use in manufacturing cigarettes.

By 1978, however, the industry turned to breeding higher nicotine varieties. The industry also engages in certain agronomic practices to increase nicotine levels, including heavy application of nitrogen fertilizers, early topping, tight "sucker" control (i.e., bud growth at the junction of stalk and leaves). In addition, tobacco varieties have been selected for tolerance to brown spot, a leaf disease that makes early harvest necessary. Leaves of disease-resistant varieties tend to remain in the field longer, and can accumulate the maximum level of nicotine. Since the 1965 introduction of the acreage-poundage control system, farmers have reduced harvestable leaves per plant and increased plant spacing to increase nicotine content. Finally, tobacco growers are transplanting tobacco crops earlier, which, coupled with the widespread use of pesticides in the soil, often results in slow early season growth, and also tends to increase nicotine content in the leaves.

The FDA concluded its report by stating:

Significant evidence also demonstrates that tobacco manufacturers have used blending techniques to increase nicotine concentrations in low-tar cigarettes and thereby maintain nicotine delivery while reducing tar delivery. FDA has observed the industry's use of proportionately greater amounts of higher nicotine-containing Burley tobacco in the tobacco blends of the lowest-tar varieties of cigarettes. In fact, Thomas Sandefur, the chief executive officer of Brown and Williamson, admitted to Congress that nicotine levels can be adjusted "up or down" depending on the blend of tobaccos used in a particular cigarette. Industry scientists have also acknowledged that tobacco manufacturers blend high-nicotine tobaccos to compensate for the reductions in nicotine caused by innovations in cigarette design and manufacturing to reduce tar delivered. These examples demonstrate that tobacco manufacturers deliberately increase the proportion of high-nicotine delivery that would otherwise result in these products.

45. More recently, the ex-Commissioner of the Food and Drug Administration, Dr. David A. Kessler, M.D., testified before the U.S. Congress. Dr. Kessler's testimony indicated that the Defendants can reduce the levels of nicotine in tobacco products. Dr. Kessler testified that "the cigarette industry has attempted to frame the debate on smoking as the right of each American to choose. The question we must ask is whether smokers really have that choice." Dr. Kessler continued and stated:

Accumulating evidence suggests that cigarette manufacturers may intend this result -- that they may be controlling smokers' choice by controlling the levels of nicotine in their products in a manner that creates and sustains an addiction in the vast majority of smokers.

We have information strongly suggesting that the amount of nicotine in a cigarette is there by design.

The public thinks of cigarettes as simply blended tobacco rolled in paper. But they are much more than that. Some of today's cigarettes may, in fact, qualify as high technology nicotine delivery systems that deliver nicotine in precisely calculated quantities that are more than sufficient to create and to sustain addiction in the vast majority of individuals who smoke regularly.

The history of tobacco industry is a story of how a product that may at one time have been a simple agricultural commodity appears to have become a nicotine delivery system.

[T]he cigarette industry has developed enormously sophisticated methods for manipulating nicotine levels in cigarettes.

In many cigarettes today, the amount of nicotine present is a result of choice, not chance.

[S]ince the technology apparently exists to reduce nicotine in cigarettes to insignificant levels, why, one is led to ask, does the industry keep nicotine in cigarettes at all?

Dr. Kessler subsequently appeared before Congress and testified that one manufacturer, Defendant Brown & Williamson, had developed a tobacco plant code-named "Y-1" with perhaps twice the nicotine content of regular tobacco.

The Y-1 conspiracy was aided and abetted by the DNA Plant Technology Corp. ("DNAP"), a biotechnology firm engaged in the development and improvement of various plant species and varieties through the use of advanced breeding and engineering techniques. In April 1995, Brown & Williamson contracted with DNAP to develop "commercial high-nicotine" varieties of tobacco.

To hide the nicotine manipulation from the public and government regulators, Brown & Williamson had most of the Y-1 development work done in Brazil, through its affiliate, Souza Cruz Overseas. To conceal the conspiracy, Brown & Williamson instructed DNAP to tell the U.S. FDA investigators that Y-1 had "never been commercialized." Only after the U.S. FDA discovered U.S. customs invoices indicating that 500,000 pounds of Y-1 nicotine-enriched tobacco had been shipped to Brown & Williamson did the company finally admit that it had developed a high nicotine tobacco. DNAP recently pled guilty to the illegal export of Y-1 tobacco seed into Brazil in violation of U.S. law.

Beyond the addictive qualities of nicotine, nicotine is also believed to contribute to cardiovascular disease and death, yet another fact of which the cigarette industry has long been aware and has consciously chose to ignore for the sake of profit.

After Dr. Earnest Wynder published his research confirming that cigarette smoke causes cancer on the skin of mice in early December 1953, the Defendants agreed upon and entered into a conspiracy which continues to this day.

Defendants openly denied the effects of tobacco products on its users while Defendants were consciously aware of the health risks to tobacco users. Although Defendants vigorously denied such evidence, Defendants pledged to the public around the world that the tobacco industry, Defendants, through a "joint industry group," would take an active role in researching all aspects of tobacco use and the health of its users.

On December 14, 1953, immediately after Dr. Wynder published his research results, Timothy V. Hartnett, president of Defendant Brown & Williamson, circulated a memorandum to the other tobacco companies in response to Dr. Wynder's research. In this memorandum, Mr. Hartnett proposed that the other tobacco companies "assist" in scientific research with a group decision in advance as to "how to handle significantly negative research results if, as, and when they develop" (emphasis original). In addition, Mr. Hartnett suggested that this "assistance" would provide the opportunity for a substantial public relations campaign.

On December 15, 1953, one day after Mr. Hartnett's memorandum was circulated, the presidents of Defendant Philip Morris, Defendant Brown & Williamson and others met in New York City to discuss and agree upon a strategy to handle the world wide health issues surrounding tobacco products. To this day, Defendants follow the basic worldwide strategy established at that meeting. The strategy adopted that day in New York provided, in general:

- that Defendants would stop using health issues to compete with one another;

- Defendants would continue to deny the knowledge that cigarettes and tobacco products caused, contributed, and/or resulted in the disease and death of its users;

- suppress any efforts to develop a "safer" or healthier cigarette;

- refusal to disseminate any literature or information which indicated that cigarettes and tobacco products were harmful;

- stifle research projects and suppress information, studies, and/or research which indicated anything adverse to Defendants positions;

- promote and encourage information so long as it supported Defendants' positions;

- promise to the public and those concerned and involved in public health matters that Defendants would accept the responsibility for the health of smokers; and

- fund so called "independent research" to discover the "objective" truth about cigarettes and health issues, and disclose all information about smoking and health.

54. A memorandum from Defendants' advertising agency Hill & Knowlton indicated that each of the aforementioned presidents agreed and understood the commitment necessary for the foregoing program was going to be a long term and continuing commitment. Further, Defendants agreed that the tobacco companies would finance a public relations campaign which would be managed by Hill & Knowlton. According to Hill & Knowlton's memorandum:

"The chief executive officers of all the leading companies -- R.J. Reynolds, Philip Morris, Benson & Hedges, U.S. Tobacco Company, Brown & Williamson -- have agreed to go along with a public relations program on the health issue."

"Because of the antitrust background, the companies do not favor the incorporation of a formal association. Instead, they prefer strongly the organization of an informal committee which will be specifically charged with the public relations function and readily identified as such."

"The current plans are for Hill & Knowlton to serve as the operating agency of the companies, hiring all the staff and disbursing all funds."

55. This "agreement" not only affected the tobacco industry in the United States, but on a worldwide basis as well. Defendant B.A.T.'s chairman, Sir Charles Ellis, was fully aware of the agreement and stated "[o]n the Continent individual companies and monopolies have agreed to pool research on the health question, thereby reducing it as a basis for competition. [I]f this Company makes any significant scientific discovery clearly relevant to health it will share its knowledge with its co-members of [in a U.K. committee of tobacco manufacturers] and not seek to obtain competitive commercial advantage."

Based on this "gentleman's agreement" in January 1954, Defendants organized the Tobacco Industry Research Committee ("TIRC"). At the creation of this organization, created for the sole purpose of intentionally misleading the public and misrepresenting tobacco products, Defendants Philip Morris and Brown & Williamson were both members. Defendant Liggett formally joined the TIRC in 1964. In addition, in 1964 the TIRC changed its name to the Council for Tobacco Research ("CTR"), also a Defendant in this action.

57. Still today, despite the evidence to the contrary, in keeping with their "agreement" of 1954, Defendants vehemently deny the smoking cigarettes containing nicotine is addictive. Before the U.S. Congress, while under oath, one tobacco industry representative affirmatively stated in 1994 "I don't agree [that nicotine is addictive]. From what I've read on nicotine is that it contributes to the flavor, the taste of the product."

58. The Chief Executive Officers of Defendants Brown & Williamson Tobacco Corporation, Philip Morris Incorporated and Liggett Group, Inc., all testified under oath before the same Subcommittee in April of 1994 that they believed nicotine is not addictive, that the companies do not manipulate nor independently control the level of nicotine in their products, and that their research "does not establish that nicotine is addictive." RJR CEO James W. Johnston said that "smoking is no more addictive than coffee, tea or Twinkies." Andrew Tisch, then CEO of Lorillard, went so far as to testify that, as of 1994, "We have looked at the data and the data that we have been able to see has all be statistical data that has not convinced me that smoking causes death."

59. The CEO's of the major tobacco companies, including Defendants', recently did an about face. In early 1998, the CEO's again testified before the U.S. Congress however this time, perhaps in an effort to assure passage of a proposed national resolution, they admitted that nicotine and cigarette smoking is addictive.

60. From 1954, despite Defendants' staunch position that they were unaware of the health risks associated with their tobacco products, Defendants did know of those health risks. Defendants did know of the addictive nature of nicotine. Defendants did know how to use their "independent" research to perpetuate their misrepresentations on the Guatemalan government and public.

Defendants possessed this knowledge but refused to disseminate that knowledge to the Guatemalan government and public pursuant to their 1954 "agreement." In lieu of disclosure, Defendants utilized the TIRC/CTR in continuing their intentional misrepresentations on and to the public. Several internal memorandums from the various Defendants address the issue(s) of the genuine use of the TIRC/CTR, for example:

"CTR began as an organization called Tobacco Industry Research Council (TIRC). It was set up as an industry Îshield' in 1954. That was the year statistical accusations relating smoking to diseases were leveled at the Industry; litigation began; and the Wynder/Graham reports were issued. CTR has helped our legal counsel by giving advice and technical information, which was needed at court trials .... [T]he Îpublic relations' value of CTR must be considered and continued .... It is very important that the industry continue to spend their dollars on research to show that we don't agree that the case against smoking is closed."

"CTR is best & cheapest insurance the tobacco industry can buy and without it the Industry would have to invent CTR or would be dead."

"Historically, the joint industry funded smoking and health research programs have not been selected against specific scientific goals, but rather for various purposes such as public relations, political relations, position for litigation, etc.... In general, these programs have provided some buffer to public and political attack of the industry, as well as background for litigious [sic] strategy."

"Historically, it would seem that the 1954 emergency was handled effectively. From this experience there arose a realization by the tobacco industry of a public relations problem that must be solved for the self-preservation of the industry."

"To date, the TIRC program has carried its fair share of the public relations load in providing materials to stamp out brush fires as they arose. While effective in the past, this whole approach requires both revision and expansion. The public relations program . . . was like the early symptoms of diabetes -- certain dietary controls kept public opinion reasonably healthy. When some new symptom appeared, a shot of insulin in the way of a news release . . . kept the patient going."

"When the products of an industry are accused of causing harm to users, certainly it is the obligation of that industry to endeavor to determine whether such accusations are true or false. Money spent for such purpose should not be regarded as a charitable contribution but as a business expense--an expense necessary to keep that industry alive. In view of the billions of dollars of annual sales of our industry our expenditures for health research has been of a minimal order."

"For nearly twenty years, this industry has employed a single strategy to defend itself on three major fronts -- litigation, politics, and public opinion. While the strategy was brilliantly conceived and executed over the years helping us win important battles, it is only fair to say that it is not--nor was it intended to be -- a vehicle for victory. On the contrary, it has always been a holding strategy, consisting of creating doubt about the health charge without actually denying it...."

In the cigarette controversy, the public, especially those who are present and potential supporters (e.g., tobacco state congressmen and heavy smokers) must perceive, understand, and believe in evidence to sustain their opinions that smoking may not be the causal factor."

61. In 1974, the CTR acknowledged some of the health risks associated with Defendants' products and stated "The public should be informed that, based on present knowledge, cigarettes with either reduced Îtar' or reduced gas vapor constituents cannot be considered safe, that is, smoking these cigarettes does not eliminate damage to health such as risk of lung cancer."

62. Although the Defendants possessed this knowledge, pursuant to the terms of their "agreement," Defendants purposefully cloaked, concealed, and covered the truth from the government of Guatemala, and other governments and public health authorities around the world and the world public. In 1956, Defendant Philip Morris received a memorandum from its research and development section regarding a new "safer" cigarette which provided "Decreased carbon monoxide and nicotine are related to decreased harm to the circulatory system as a result of smoking ... decreased irritation is desirable ... as a partial elimination of a potential cancer hazard."

63. In 1957, Defendant Brown & Williamson had discovered the causal relationship between smoking and cancer. In one memorandum, Defendant Brown & Williamson stated that there was a "causal relation" between "zephyr and tobacco smoking." "Zephyr" was Defendant Brown & Williamson's code name for cancer.

64. A 1958 memorandum from Defendant Philip Morris' vice president of research provided "the evidence...is building up that heavy cigarette smoking contributes to lung cancer either alone or in association with physical and physiological factors."

65. A 1961 memorandum to Defendant Philip Morris from its research and development section regarding the reduction of carcinogens in smoke stated:

To achieve this objective will require a major research effort, because --Carcinogens are found in practically every class of compounds in smoke. This fact prohibits complete solution of the problem by eliminating one or two classes of compounds. The best we can hope for is to reduce a particularly bad class, i.e., the polynuclear hydrocarbons, or phenols ....

...Flavor substances and carcinogenic substances come from the same classes, in many instances.

66. In 1961, Defendant Liggett hired an independent research firm which reported back to Defendant Liggett that cigarette tobacco contains "biologically active materials" that are cancer-causing, cancer promoting, poisonous, and stimulating, pleasurable, and flavorful.

67. In 1963, the general counsel of Defendant Brown & Williamson, Addison Yeaman, wrote that cigarettes "cause, or predispose, lung cancer..." and "[t]hey contribute to certain cardiovascular disorders..." and "may well be truly causative in emphysema, etc."

68. In a 1963 memorandum, Defendant Liggett stated:

Basically, we accept the inference of a causal relationship between the chemical properties of ingested tobacco smoke and the development of carcinoma, which is suggested by the statistical association shown in the studies of Doll and Hill, Horn, and Dorn with some reservations and qualifications and even estimate by how much the incidence of cancer may possibly be reduced if the carcinogenic matter can be diminished, by an appropriate filter, by a given percentage.

69. In 1970, Defendant Brown & Williamson along with its parent company, Defendant BATCO, engaged in an internal debate of whether to publish or not the research that indicated "nicotine may be implicated in the etiology of cardiovascular disease."

70. In the early 1980s, Defendant Philip Morris confirmed the addictive nature of nicotine. Based on this knowledge, research was instituted to develop a synthetic nicotine which did not have the propensity to cause cardiovascular complications. This research led to the discovery of a type of synthetic/artificial nicotine which exhibited the same addictive qualities of nicotine but without the apparent cardiovascular complications. Following this discovery and a briefing to Defendant Philip Morris' top executives, later in 1984, after the company had the opportunity to more fully investigate this research, the researchers were fired, instructed to kill and dispose of the test animals, instructed to withdraw a paper submitted for publication in a scientific journal, and threatened with legal action if the researchers published their research results. The researchers complied until 1994 when they testified before a congressional committee.

71. Defendant Liggett conducted research for a "safer" cigarette, called project "XA" which started in 1968. After expending approximately $14 million, in 1979 Defendant Liggett found "[c]igarette tar has been neutralized" and there was "[n]o evidence for new or increased hazard..." Based on this knowledge, and in keeping with the conspiracy established in 1954, one of Defendant Liggett's executives stated "[a]ny domestic activity will increase the risk of cancer litigation on existing products." Defendant Liggett was also in fear of reprisal from the other Defendants, consequently, this "safer" cigarette project was aborted. Defendant Liggett's assistant director of research during project "XA", James Mold testified:

- that the XA project produced a safer cigarette. He stated, "We produced a cigarette which was, we felt, commercially acceptable as established by some consumer tests, which eliminated carcinogenic activity."

- that after 1975, all meetings on the project were attended by lawyers, lawyers collected all notes after the meetings, and all documents were directed to the law department to maintain the attorney-client privilege. He stated, "Whenever any problem came up on the project, the Legal Department would pounce upon that in an attempt to kill the project, and this happened time and time again."

- that he was at a conference of scientists in Buenos Aires prepared to present his research regarding a less harmful cigarette when he received a "frantic call" from legal counsel and was told not to present the paper or issue the press release. He was instructed not to publish his results in the Journal of Preventative Medicine.

- when asked why Liggett didn't market a safer cigarette. He answered, "Well, I can't give you, you know, a positive statement because I wasn't in the management circles that made the decision, but I certainly had a pretty fair idea why.... [T]hey felt that such a cigarette, if put on the market, would seriously indict them for having sold other types of cigarettes that didn't contain this, for example." Also, "[a]t a meeting we held in . . . New Jersey at the Grand Met headquarters . . . the various legal people involved and the management people involved and myself were present. At one point Mr. Dey who at that time, and I guess still is the president of Liggett Tobacco, made the statement that he was told by someone in the Philip Morris company that if we tried to market such a product that they would clobber us."

Defendant Brown & Williamson also conducted research on a "safer" cigarette. All efforts to discover such were abandoned because "...there can be no research on a safer cigarette. Any research on a safer cigarette would clearly expose every other product as being unsafe and, therefore, present a liability issue in terms of any type of litigation."

In 1980, Defendant B.A.T. researched in the areas of irritation and smoke inhalation for a safer product but this research was abandoned, "Dangerous area. Please do not publish or circulate. No more work is needed on biological side."

Despite the plethora of information available and known to Defendants, in keeping with the conspiracy spawned in 1954, Defendants refused to publish this information, or continue research into the areas of safer tobacco products all in the name of profit and at the expense of everyone.

Defendants' conduct, acts, and omissions injured not only the users of Defendants' products, but also injured Plaintiff. Defendants' conduct, acts, and omissions caused Plaintiff to fail to take, or to delay taking, prompt and adequate steps to address the health effects of tobacco products. These measures would have included program to educate residents of Guatemala as to nicotine addiction; smoking cessation efforts; and taking other steps to reduce the harms associated with tobacco, including but not limited to increased taxes, restrictions on advertising and marketing, and other measures. Similarly, had Defendants not suppresses the manufacture and sale of safer cigarettes, the Plaintiff could have adopted programs and rules encouraging those who smoked to use the safer cigarettes. These measures would have been effective in reducing the tobacco-related costs incurred by Plaintiff.

Plaintiff has expended and will continue to expend substantial sums of money due to the cost of providing health care services for treatment of diseases caused by or exacerbated by tobacco. These expenditures have been caused by the unlawful and wrongful actions of the Defendants. For years in the past, Plaintiff has paid staggering amounts of money to health care providers due to smoking-caused and related disease, disability and death. For years in the future, Plaintiff will continue to pay staggering amounts of money to an indefinite number of health care providers due to smoking-caused disease, disability and death. These past and future expenditures have been and will continue to be caused by the wrongful actions of the Defendants.

Many of the residents of Guatemala were exposed, through inhalation, to the smoke created when the Defendants' cigarettes were burned. When inhaled, cigarette smoke causes a variety of diseases including but not limited to:

- Emphysema;

- Pulmonary or bronchogenic carcinoma;

- Impaired pulmonary capacity;

- Obstructive lung disease;

- Cardiovascular disease;

- Increased susceptibility to one of the foregoing as well as asbestos-related diseases such as lung cancer;

- Exacerbated or increased the risk of and/or the physical burdens caused by other respiratory ailments including pneumoconiosis, asbestosis, bronchitis, pneumonia and others;

- Complications of pregnancy and childbirth as well as low birth-weight babies and related pediatric health problems; and/or

- Premature death.

Each of the Defendants knew, or should have known, about the adverse impact of the inhalation of cigarette smoke on the health of both users and bystanders. Instead of warning Plaintiff, intended users and the general public about these dangers, the Defendants ignored, or actively and fraudulently concealed such information or condoned such concealment, and commanded, directed, advised, encouraged, aided and abetted, and/or conspired with others, or each other, in so doing in order to sell cigarettes and avoid litigation by those who were injured by inhalation of cigarette smoke. Additionally, the Defendants not only concealed the hazards of cigarette smoking but also actively represented cigarettes as safe. Said actions and/or inactions constitute gross negligence and show a callous disregard for the rights and safety of the residents of Guatemala.

As a direct and proximate contributing result of having inhaled cigarette smoke during the exposure period, certain residents of Guatemala have contracted diseases or suffered certain injuries which resulted in the expenditure by the Plaintiff of substantial sums of money in order to provide medical care.

Plaintiff further charges that, as a direct and proximate result of having inhaled cigarette smoke, residents of Guatemala will continue to suffer from the above-referenced conditions, and the Plaintiff will continue to expend substantial sums of money to care for them.

Because of the latency period of the diseases referenced herein and the active concealment by the Defendants of the causes and effects of exposure to cigarette smoke, the Plaintiff has only recently discovered the liability of the Defendants to the Plaintiff for medical expenses expended for medical care.

Defendants collectively sold or aided and abetted in the sale of cigarettes containing tobacco, which cigarettes were and are defective and unreasonably dangerous.

Defendants' cigarettes are designed, manufactured, marketed and sold by the Defendants to be smoked by the consuming public.

The smoking of cigarettes was not only a foreseeable use, it was the very purpose for which these Defendants manufactured, sold or distributed cigarettes.

At all pertinent times, Defendants knew, or should have known, that the smoking of cigarettes was and is hazardous to human health.

Defendants through their funding and control of certain studies concerning the effects of smoking on human health, their control over trade publications, promoting, marketing, and/or through other agreements, understandings and joint undertakings and enterprises, conspired with, cooperated with and/or assisted each other in the wrongful suppression, active concealment and/or misrepresentation of the true relationship between smoking cigarettes and various diseases, all to the detriment of the public health, safety and welfare and thereby causing harm to the Plaintiff.

Cigarettes are inherently, abnormally, and unreasonably dangerous. The health risks and costs of cigarette smoking to the residents of Guatemala and to the Plaintiff greatly outweigh any claimed utility of cigarettes. The Defendants knew, or should have known, of the dangers inherent in the use of their cigarettes, and that the Plaintiff would be harmed by the intended and foreseeable use of their cigarettes.

For many years, the Defendants have been engaged in the business of manufacturing, testing, designing, promoting, marketing, packaging, selling, distributing, and/or placing into the stream of commerce in and through Guatemala numerous defective, unreasonably dangerous and hazardous cigarettes, or, in the normal course of their business, have materially participated with, conspired with and/or otherwise aided, abetted and assisted other Defendants in so doing.

As a direct and proximate result of the defective design, testing, manufacturing, marketing, and practices of the Defendants, the Defendants' cigarettes were and are themselves defective and unreasonably dangerous.

The Defendants' cigarettes reached the users, consumers and bystanders thereof in substantially the same condition which they were in when originally manufactured, distributed and sold by the Defendants. At the time the Defendants' cigarettes were sold or placed on the market, they were in a defective condition, unreasonably dangerous to users and consumers, and to bystanders in the vicinity of the users and consumers.

The defective condition of the Defendants' cigarettes directly and proximately caused thousands of Guatemala's residents to suffer various tobacco-related diseases, injuries and sicknesses, and directly and proximately caused the Plaintiff to expend millions of dollars in order to provide necessary health care to these residents and their dependents, thereby damaging the Plaintiff.

At all pertinent times, it was foreseeable by the Defendants that certain of Guatemala's residents who used the Defendants' cigarettes would become ill and suffer injury, disease and sickness as a result of using the cigarettes as the Defendants intended, and it was further foreseeable by the Defendants that the Plaintiff would be required to expend millions of dollars each year in order to provide necessary medical treatment and facilities to those residents so injured.

Defendants have conspired together, sometimes acting through a clandestine "Special Projects" program of the TIRC/CTR, for the purpose of fraudulently misleading Guatemala, and the public with regard to the health risks of smoking, all for the purpose of furthering the Defendants' profits from the sale of their cigarettes and tobacco products. As recently as March of 1991, Defendants sponsored a seminar in Guatemala City titled "The Truth About Tobacco." At this seminar, industry paid experts, Drs. Philip Witorsch, Paul Dietrich and Simon Turner related that there is insufficient evidence that tobacco causes lung cancer and that the use of tobacco products has not been shown to cause substantial health damage. Defendants knew of the hazards of cigarette smoking. The Defendants affirmatively and actively concealed information which clearly demonstrated the dangers of smoking and affirmatively misled the Guatemalan public with regard to the material and clear risks of smoking. The Defendants knowingly engaged in these activities with the intent that the public would continue to purchase the Defendants' cigarettes. The Defendants knew that the public would not be in a position to know the true risks of smoking and knew that the public would rely upon the misleading information that the Defendants promulgated to their detriment.

The transnational Defendants are able to get around advertising and promotion regulations because of their heavy involvement in the development of, and enormous influence over the outcome of, public policy in every part of the world including Guatemala. Through their influence, the Defendants have been able to curtail regulatory expansion and increase their market. This includes recent advertising in Guatemala designed to increase the market in Guatemala's indigenous population, a segment of Guatemala which traditionally has consumed tobacco in lower quantities than other groups. As an example of the influence peddling of Defendants, Philip Morris recently announced in Guatemala a significant "donation" to the Ministry of Culture to preserve Mayan ruins.

At all pertinent times, the Defendants purposefully and intentionally engaged in these activities, and continue to do so, knowing full well that when Guatemala's residents use their cigarettes as those cigarettes were and are intended to be used, that Guatemala's residents would be substantially certain to suffer disease, injury and sickness, including cancer, emphysema, heart disease and other illnesses, and that the Plaintiff will be injured thereby, as described above.

At all pertinent times, the Defendants purposefully and intentionally engaged in these activities, and continue to do so, knowing full well that the Plaintiff, as a result of these efforts by the Defendants, would be obligated to, and would, provide health care and other necessary facilities and services for certain of Guatemala's residents thus harmed by the intended use of the Defendants' cigarettes, and that the Plaintiff thereby would be harmed.

At all pertinent times, these Defendants, individually and collectively, had a duty not to deceive or mislead the Plaintiff, which Defendants intentionally breached by their individual and collective activities.

The statements and representations made and promotional schemes used by the Defendants were deceptive, false, incomplete, misleading and untrue. The Defendants knew, or should have known, that the said statements, representations and advertisements were deceptive, false, incomplete, misleading and untrue at the time of making such statements. The Defendants had an economic interest in making such statements. The residents of Guatemala who purchased and used the Defendants' cigarettes had no knowledge of the falsity, misleading or deceptive nature of the Defendants statements, representations and advertisements when they purchased the Defendants' cigarettes; moreover, those residents had a right to rely on such statements, representations and advertisements. Each of the Defendants' misleading and deceptive statements, representations and advertisements were material to those residents' purchasing the Defendants' cigarettes in that Guatemala's residents would not have purchased the Defendants' cigarettes if they had known that said statements, representations and advertisements were deceptive, false, incomplete, misleading and untrue.

The residents of Guatemala and the Republic of Guatemala itself had a right to rely upon the representations of the Defendants. The Defendants' decision to mislead and deceive the Plaintiff and the residents of Guatemala directly, proximately and foreseeably caused the damage suffered by the Plaintiff.

The Defendants also have violated the antitrust laws of the United States and of the states, laws that protect competition over quality and innovation just as they protect price competition. Defendants have broken these laws by entering into, and continuing to this day to abide by the terms of, a combination and conspiracy in unreasonable restraint of trade:

to suppress innovation and competition in product quality -- by agreeing not to engage in research, development, manufacturing and marketing of less harmful cigarettes and other tobacco products;

to suppress output in a market, and to engage in a concerted refusal to deal -- by agreeing to zero output of less harmful cigarettes and other tobacco products; and,

to suppress competition in marketing -- by agreeing not to take business from one another by making claims as to the relative safety of particular brands, whether or not such claims would have been truthful.

101. This willful violation of the antitrust laws resulted in clearly foreseeable injury to Guatemala. It was foreseeable that their antitrust violations would cause the precise type of injury that Guatemala has suffered in its business or property -- increased costs for health care and related services needed by smokers -- injury that is inextricably intertwined with that suffered by the smokers themselves. Moreover, but for the unlawful agreement, Guatemala would have had the opportunity to be customers for less harmful cigarettes, and other tobacco or nicotine products, purchasing such products as part of an effort by providers of health services which Guatemala provides, to wean their members from addiction to smoking or using other tobacco products to ameliorate the consequences of that addiction. In this action, Guatemala intend to bring the Defendants to account for the business and financial injuries, primarily in the form of payments for treatments of tobacco-related diseases, that Guatemala has suffered as a direct and proximate result of Defendants' decades-long conspiracy of deceit, manipulation and death.

102. Cigarette manufacturing has been one of the most concentrated industries in the United States and the world throughout this century. Until 1994, Philip Morris, R.J. Reynolds, Brown & Williamson, American Tobacco, Lorillard and Liggett together comprised the Big Six cigarette manufacturers, which controlled virtually 100% of the market in the United States. In Guatemala, Philip Morris and B.A.T. now control 100% of the market. The tobacco industry is a tight-knit oligopoly, with a history of collusion. There are substantial barriers to entry into the tobacco market. These barriers include substantial capital costs for entry, the existence of patents, reputational barriers, firmly entrenched incumbent firms with stable market shares, substantial economies of scale and production and regulatory barriers. These barriers to entry are evidenced by the absence of entry in the tobacco market, and a history of high profit margins among participants in the industry. In part because of its concentration, and in part because its customers are physically addicted to the product, making demand relatively inelastic, the tobacco industry is enormously profitable. For example, in 1996, Philip Morris' parent corporation reported record earnings. Philip Morris' record earnings in 1996 were driven, in part, by increased sales of nicotine products in Guatemala. In addition, industry concentration and high barriers to entry have allowed Philip Morris/BATCO and their trade associations to engage in a decades-long conspiracy not to compete in research, development, production and marketing of less harmful cigarettes.

VII.

CAUSES OF ACTION

1.

RESTITUTION/UNJUST ENRICHMENT

103. The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

104. Many of Guatemala's residents who are afflicted with tobacco-related diseases are poor, undereducated, and unable to provide for their own medical care. These residents rely upon the Plaintiff to provide for their medical care, which reliance results in an extreme burden on the financial resources of Guatemala. Yet, these very residents are targeted by Defendants' promotional techniques. Guatemala has expended hundreds of millions of dollars in caring for its residents who have and are suffering from lung cancer, cardiovascular disease, emphysema, chronic obstructive pulmonary disease, and a variety of other cancers and diseases that were and are caused by cigarettes and other tobacco products marketed and sold by Defendants.

105. While Guatemala and its various agencies and institutions are struggling to pay for the health care costs of tobacco, the Defendants continue to reap millions of dollars in profits from the sale of cigarettes and other tobacco products in Guatemala.

106. The Defendants have avoided regulations and have been able to promote the sale of their cigarettes and other tobacco products to the residents of Guatemala by continuing to misinform, mislead, and misrepresent the true carcinogenic, pathologic and addictive qualities of cigarettes and other tobacco products.

Plaintiff has conferred substantial benefits on Defendants by paying the medical expenses of participants injured by Defendants. Defendants have externalized the health costs of smoking and have wrongfully passed them onto Plaintiff. Plaintiff has relieved Defendants of the possibility of immense liability and litigation expenses. Defendants have also received a benefit in terms of Plaintiff' forbearance from anti-tobacco initiatives. Due largely to Defendants' own fraud, Plaintiff has not adopted stricter anti-tobacco measures. Defendants have consequently reaped additional profits. Plaintiff has also increased Defendants' profits from addicted smokers by supplying those smokers with needed medical care so that they were able to purchase more cigarettes from Defendants.

In equity and fairness, it is the Defendants, not the Plaintiff, who should bear the costs of tobacco-related diseases. By avoiding their own duties to stand financially responsible for the harm done by their cigarettes and other tobacco products, the Defendants wrongfully have forced the Plaintiff to perform such duties and to pay the health care costs of tobacco-related disease. As a result, the Defendants have been unjustly enriched to the extent that the Plaintiff has had to pay these costs.

2.

INDEMNITY

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

As a direct and proximate result of the breaches of duty and omissions of the Defendants as alleged above, the Plaintiff was and is obligated to pay and has paid millions of dollars in the past for the provision of necessary medical care, facilities and services for certain of those Guatemalan residents injured by the Defendants' cigarettes and unable to afford and otherwise obtain such necessary medical care, facilities and services.

The Plaintiff was and is legally obligated to pay the aforementioned sums and did not conduct themselves in any wrongful manner in being so obligated to pay and in paying the aforementioned sums.

The Defendants have been unjustly enriched as a result.

In all fairness and justice, the Defendants should indemnify Plaintiff for the provision of necessary medical care, facilities and services for those aforementioned residents injured by the Defendants' cigarettes for past and future injuries, illnesses, and deaths arising from the use of Defendants' products.

3.

NEGLIGENCE & GROSS NEGLIGENCE

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The Defendants had a duty to exercise reasonable care in the manufacturer, sale and/or distribution of Defendants' cigarettes and other tobacco products.

The Defendants breached that duty by the conduct alleged above. Defendants' negligence amounted to and does constitute gross negligence.

As a result of Defendants' breach, cigarettes were manufactured, sold and distributed in Guatemala, and the residents of Guatemala contracted diseases as a result of the intended and foreseeable use of Defendants' cigarettes. Furthermore, Plaintiff was and is required to provide medical assistance to the residents of Guatemala. Guatemala has incurred substantial monetary damage as a direct and proximate result of the conduct of the Defendants.

4.

STRICT LIABILITY FOR DEFECTIVE AND

UNREASONABLY DANGEROUS PRODUCT

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The residents of Guatemala, for many years, consumed and used Defendants' cigarettes and other tobacco products in the manner in which the tobacco products were intended to be used, without any substantive alteration or change in the product.

The Defendants' cigarettes were delivered to the residents of Guatemala in a condition that was unreasonably dangerous to the user. The Defendants expected and intended for the product to be used by residents of Guatemala without substantial change affecting the unreasonably dangerous condition.

The Defendants' cigarettes were unreasonably dangerous due to their design in that (1) the cigarettes failed to perform as safely as an ordinary consumer would expect when used as intended; and (2) the risk of danger in the design of the cigarettes outweighed any benefits associated with the use of cigarettes.

In breaching their duties to the Plaintiff, as described above, Defendants acted intentionally, recklessly, maliciously and wantonly in that the Defendants knew or should have known through information available exclusively to them and otherwise that their cigarettes were defective and unreasonably dangerous if used in the manner intended by the Defendants. The Defendants further knew or should have known that their aforesaid breach of duty would be substantially certain to result in the injuries complained of herein.

5.

STRICT LIABILITY FOR CONDUCT OF

AN ABNORMALLY DANGEROUS ACTIVITY

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The Defendants' conduct alleged above in the manufacture, marketing, promotion and sale of their cigarettes and other tobacco products constitutes an abnormally dangerous activity.

The Defendants consequently are responsible for the harm caused by the use of the cigarettes and other tobacco products manufactured, marketed, promoted and sold by them.

The Defendants were aware, or should have been aware, that Plaintiff would be required to pay medical and other expenses relating to the treatment of and care for many of those with smoking-related injury, illness and disease wrought by the use of cigarettes manufactured, marketed, promoted and sold by the Defendants.

As required by law and by public necessity, Plaintiff has paid medical and other expenses relating to the treatment of and care for many of those with smoking-related injury, illness and disease wrought by the use of cigarettes and other tobacco products manufactured, marketed, promoted and sold by Defendants.

The Defendants are liable to the Plaintiff for that portion of the Plaintiff's expenditure for such medical and other expenses attributable to the use of cigarettes manufactured, marketed and sold by them.

6.

BREACH OF EXPRESS AND/OR IMPLIED WARRANTIES

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The Defendants made affirmations or promises through extensive advertising and promotion relating to their products regarding the health effects of their products to the public.

These affirmations, as well as the extensive advertising of the industry, became the basis of the bargain for many individuals, both in beginning to use tobacco or continuing to use tobacco. The residents of Guatemala relied on these continuing affirmations in buying and using the Defendants' products. The residents of Guatemala relied on the Defendants' skill or judgment in manufacturing a product fit for human consumption.

The Defendants' products are unmerchantable and are unfit for safe use when sold and consumed as intended. The Defendants have breached their implied warranty of merchantability because their products are not fit for their intended purposes. The Defendants had reason to know that the particular purposes for which their products are intended are unreasonably dangerous.

The Defendants have breached both the express and implied warranties described above and should be held accountable for the damages inflicted as a result.

As a direct result of the Defendants' breach of express and implied warranties of merchantability, Plaintiff has been damaged because it has been forced to incur medical expenses in the treatment of sickness, disease or injury caused by the Defendants' conduct.

7.

NEGLIGENT PERFORMANCE OF A VOLUNTARY UNDERTAKING

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The Defendants voluntarily assumed the duty and responsibility to report honestly and completely on all research regarding cigarette smoking and health via their public pronouncements referenced above.

The Defendants breached this duty by not only failing to report on such research but also by knowingly and actively publishing and publicizing fraudulent science.

The Defendants further breached this duty by suppressing negative research data regarding cigarettes and health.

The Defendants knew or should have known that Plaintiff, smokers, and others would reasonably rely on their pronouncements.

The Defendants knew or should have known that such reliance would result in injury.

As a result of Defendants' breach of duty, Plaintiff suffered harm.

8.

FRAUD, INTENTIONAL MISREPRESENTATION

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The Defendants intentionally suppressed material facts about the hazards of cigarette smoking.

The Defendants knowingly and intentionally lied to and deceived the Plaintiff, as well as the public and residents of Guatemala.

The Defendants participated in advertising of cigarettes which portrayed them as, at least, harmless and, at best, healthy; such a portrayal was an intentional misrepresentation of the hazardous nature of cigarettes.

The purpose of the suppression of damaging research data and the manufacture of fraudulent science was to prevent Plaintiff and its public health authorities from taking prompt and adequate action to address the health risks of tobacco, and to confuse potential consumers about the hazards of cigarettes, thereby encouraging them to smoke and to allay the fears of smokers, thereby encouraging them to continue to smoke.

As a result of Defendants' fraud, Plaintiff did indeed fail to take prompt and adequate measures to address the health risk of smoking, as Defendants fully intended. Had such measures been taken, the tobacco-related health costs in Guatemala would have been reduced.

9.

CONSPIRACY AND CONCERT OF ACTION

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The Defendants entered into an agreement to suppress and conceal scientific and medical information relating to cigarette smoking and the resulting diseases.

The Defendants participated in and cooperated with each other in the aforementioned conspiracy which enabled each and every manufacturer and distributor of cigarettes to take the position that the association between cigarette smoking and disease had not been established.

In order to carry out their conspiracy, the Defendants formed The Tobacco Institute Research Council ("TIRC") and the Council for Tobacco Research ("CTR").

The TIRC and the CTR actively participated in the conspiracy to conceal and suppress the hazards of cigarette smoking.

The TIRC and the CTR, acting on behalf of the Defendants monitored research and literature in the scientific and medical communities regarding cigarette smoking and actively attempted to suppress any negative reports.

When TIRC and CTR were unsuccessful in suppressing negative reports regarding cigarette smoking, the two organizations acted to challenge, dilute and diminish the influence of such reports.

As a result of the conspiracy, the Defendants were able to continue selling tobacco cigarettes to an unsuspecting and confused public including the residents of Guatemala.

As a result of the conspiracy, the Plaintiff and the residents of Guatemala were intentionally and willfully misled and deceived; thereby making it impossible for regulators to properly assess and control the hazards presented by cigarette use.

As a direct and proximate result of the Defendants' actions, Guatemala's residents became ill and suffered injuries which required medical care which Plaintiff was obliged to provide.

10.

FEDERAL RACKETEER INFLUENCED AND CORRUPT

ORGANIZATION ACT

[VIOLATION OF 18 U.S.C. 1962(c) and (d)]

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

The Defendants are "persons" within the meaning of 18 U.S.C. S 1961(3).

At all relevant times, Defendants, have constituted an "enterprise" within the meaning of 18 U.S.C. S 1961(4). The enterprise is an ongoing organization whose constituent elements function as a continuing unit in maximizing the sales of tobacco products, misleading the public and regulators as to the health hazards of tobacco, suppressing the truth concerning the addictive properties of nicotine and of the Defendants' manipulation of nicotine levels, and carrying out other elements of Defendants' scheme. The enterprise has an ascertainable structure and purpose beyond the scope of the Defendants' predicate acts and their conspiracy to commit such acts. The enterprise has engaged in, and its activities have affected, interstate and foreign commerce. The enterprise continues to date through the concerted activities of the Defendants actively to disguise the nature of their wrongdoing, to conceal the proceeds thereof, and to conceal the Defendants' participation in the enterprise in order to avoid and/or minimize their exposure to criminal and civil penalties and damages.

Each Defendant has been associated with this enterprise. Moreover, each Defendant participated, directly or indirectly, in the conduct of the affairs of the enterprise. Each Defendant helped to direct the enterprise's actions and manage its affairs.

Each Defendant "conduct[ed] or participate[d], directly or indirectly, in the conduct of [the] enterprise's affairs through a pattern of racketeering activity," in violation of 18 U.S.C. S 1962(c). The Defendants' pattern of racketeering activity dates from December 15, 1953, through the present and threatens to continue in the future.

Defendants' multiple predicate acts of racketeering include but are not limited to:

a. Wire and mail fraud, in violation of 18 U.S.C. Sections 1341 and 1342. The Defendants engaged in schemes to defraud Plaintiff, members of the public and others regarding their tobacco products and health issues. Those schemes have involved fraudulent misrepresentations and/or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension. Defendants executed or attempted to execute those schemes through the use of the U.S. mails and through transmissions by wire, radio and television communications in interstate commerce in the U.S. and all over the world.

i. Chief executive officers and/or representatives of the Defendants made false and fraudulent statements under penalty of perjury in hearings before the House Subcommittee on Health and the Environment, convened on March 25, April 14, April 28, May 17, May 26, June 21 and June 23, 1994, and televised nationwide and throughout the world. The witnesses affirmatively denied that Defendants manipulate the amount of nicotine contained in cigarettes; denied that using tobacco products causes cancer; and denied that there is any correlation between the amount of nicotine in tobacco products and the incidence of cancer. The chief executive officers and representatives giving false testimony were:

- William I. Campbell, President, Philip Morris U.S.A.

- Edward A. Horrigan, Jr., Chairman, Liggett Group, Inc.

- Tilford F. Riehl, Vice-President, Brown & Williamson Tobacco Corp.

- Thomas E. Sandefur, Jr., Chairman and Chief Executive Officer, Brown & Williamson Tobacco Corp.

- Charles O. Whitley, Senior Consultant, The Tobacco Institute.

ii. On the nationally televised CBS program Face the Nation, air date March 27, 1994, 10:30 a.m. - 11:00 a.m., EDT, Ms. Brenda Dawson, Vice-President of the Tobacco Institute, stated before a live television and radio audience: "all six cigarette manufacturers in the United States do . . . not add nicotine" and "they don't manipulate nicotine. So Congress has been told form[ally] by every cigarette manufacturer in the United States that this claim is without foundation."

b. Bribery, through attempts to influence the testimony of "any person" under oath "upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the laws of the United States to hear evidence or take testimony, or with intent to influence such person to absent himself therefrom." 18 U.S.C. S 201(b)(3). These violations include attempts to influence the testimony of whistleblowers and also payments to tobacco company officials who have knowingly made false statements before Congress.

c. Use of facilities in interstate or foreign commerce to distribute the proceeds of unlawful activity and otherwise to promote, manage, establish, carry on or facilitate the promotion, management, establishment, or carrying on of unlawful activity, in violation of 18 U.S.C. S 1952.

d. Engaging in monetary transactions involving the proceeds of crime in violation of 18 U.S.C. S 1957, which prohibits "knowingly engag[ing] or attempt[ing] to engage in a monetary transaction in criminally derived property that is of a value greater than $10,000 and is derived from specific unlawful activity," including mail and wire fraud. 18 U.S.C. Sections 1957(f)(3) and 1956 (c)(7)(A).

The acts form a "pattern" of racketeering activity. Defendants have been related in their common objectives of maximizing global sales of tobacco products and misleading Plaintiff, the public, and the residents of Guatemala to the hazards of tobacco and the addictive properties of nicotine. Defendants have had the same or similar purposes, results, participants, victims and methods of commission. The acts have been consistently repeated and are capable of further repetition.

Each Defendant also conspired to violate 18 U.S.C. S 1962(c), in violation of S 1962(d).

Guatemala has been injured in its property by reason of these violations of S 1962(c) and (d) because, in administering Guatemala's health programs, it has been required to incur significant costs and expenses attributable to tobacco-related diseases. In the absence of the Defendants' violation of S 1962(c) and (d), these costs and expenses would have been substantially reduced. Plaintiff's injury is not a form of compensation for personal injuries suffered by smokers. It is a separate injury to the Plaintiff's property and is wholly distinct from the harms suffered by individuals. Under the provisions of 18 U.S.C. S 1964(c), Plaintiff is entitled to bring this action and to recover herein treble damages, the costs of bringing this suit, and reasonable attorney's fees.

11.

FEDERAL RACKETEER INFLUENCED AND CORRUPT

ORGANIZATION ACT

[VIOLATION OF 18 U.S.C. S 1962(a) and (d)]

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

Each Defendant is a "person" within the meaning of 18 U.S.C. Section 1961(3).

At all relevant times, there has existed an "enterprise" for purposes of 18 U.S.C. Section 1961(4) composed of a group of individuals associated in fact as potential witnesses and government investigators, prosecutors (civil and criminal), legislators and regulators concerned with the health risks of cigarette smoking.

The enterprise is an ongoing organization whose constituent elements function as a continuing unit. The enterprise has engaged in, and/or its activities have affected, interstate or foreign commerce.

The Defendants have generated income through a pattern of racketeering activity, part of which they have "use[d] or invest[ed], directly or indirectly, ... in acquisition of an interest in, or the establishment or operation of" this enterprise. The Defendants have used their illicit products to make campaign contributions, pay lawyers and lobbyists and otherwise influence the political and legal processes in Washington D.C. and elsewhere.

Alternatively and/or in addition, at all relevant times, there has existed an "enterprise" for purposes of 18 U.S.C. S 1961(4) composed of a group of individuals associated in fact as those who advertise, promote, distribute and/or retail tobacco products to adults and children.

The enterprise is an ongoing organization whose constituent elements function as a continuing unit. The enterprise has engaged in, and/or its activities have affected, interstate and foreign commerce.

Defendants have generated income through a pattern of racketeering activity part of which they have "use[d] or invest[ed], directly or indirectly, ... in acquisition of an interest in, or the establishment or operation of" this enterprise. The Defendants have used their illicit profits to buy advertising, to fund marketing promotions, to pay incentives to advertisers, promoters and retailers and in other ways that have constituted acquisition of an interest in, or the establishment or operation of, the enterprise.

In addition, the Defendants have conspired to violate 18 U.S.C. Section 1962(a), in violation of S 1962(d).

Guatemala was injured in its property by reason of these violations of S 1962(a) and (d) because, in administering Guatemala's health programs, they have been required to incur significant costs and expenses attributable to tobacco-related diseases. In the absence of the Defendants' violation of Section 1962(a) and (d), these costs and expenses would have been substantially reduced. Plaintiff's injury is not a form of compensation for personal injuries suffered by smokers. It is a separate injury to the Plaintiff's property and is wholly distinct from the harms suffered by individuals. Under the provisions of 18 U.S.C. Section 1964(c), Plaintiff is entitled to bring this action and to recover herein treble damages, the costs of bringing this suit, and reasonable attorney's fees.

12.

FEDERAL RACKETEER INFLUENCED AND CORRUPT

ORGANIZATION ACT

[VIOLATION OF 18 U.S.C. S 1962(b) and (d)]

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

Each Defendant is a "person" within the meaning of 18 U.S.C. Section 1961(4) composed of a group of individuals associated in fact as potential witnesses and government investigators, prosecutors (civil and criminal), legislators, and regulators concerned with the health risks of cigarette smoking.

The enterprise is an ongoing organization whose constituent elements function as a continuing unit. The enterprise has engaged in, and/or its activities have affected, interstate or foreign commerce.

The Defendants have used a pattern of racketeering acts to mislead the public and public officials, suppress the truth, intimidate whistleblowers, and attempt to influence public officials. The pattern of racketeering acts has thus permitted Defendants "to acquire or maintain, directly or indirectly, an interest in or control of" the enterprise, in violation of 1962(b).

In addition, the Defendants have conspired to violate this provision, in violation of Section 1962(d).

Guatemala was injured in its property by reason of these violations of Section 1962(b) and (d) because, in administering Guatemala's health programs, it has been required to incur significant costs and expenses attributable to tobacco-related diseases. In the absence of the Defendants' violation of Section 1962(b) and (d), these costs and expenses would have been substantially reduced. Plaintiff's injury is not a form of compensation for personal injuries suffered by smokers. It is a separate injury to the Plaintiff's property and is wholly distinct from the harms suffered by individuals. Under the provisions of 18 U.S.C. Section 1964(c), Plaintiff is entitled to bring this action and to recover herein treble damages, the costs of bringing this suit, and reasonable attorney's fees.

13.

RESTRAINT OF TRADE IN MARKET FOR CIGARETTES

AND OTHER TOBACCO PRODUCTS TO RESTRICT

PRODUCT QUALITY AND CHOICE

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

Beginning at a time uncertain, but at least as early as the 1950s, and continuing until the present date, Defendants entered into a contract, combination, and/or conspiracy in unreasonable restraint of trade and commerce in the market for cigarettes and other tobacco products in Guatemala and the United States, in willful and/or flagrant violation of 15 U.S.C. Section 1 et. seq.

The Defendants entered into a contract, combination, and/or conspiracy to eliminate competition, including the dissemination of product information, regarding the quality, safety and composition of cigarettes and tobacco products, thereby eliminating alternative products from the market, restricting consumer choice and causing consumers to suffer tobacco-related illnesses and health-care costs. These health care costs are inextricably intertwined with, and flow directly from, the anti competitive restriction of product choice and suppression of product information.

In furtherance of Defendants' contract, combination and/or conspiracy to eliminate competition, including the dissemination of product information regarding the quality, safety and composition of cigarettes and tobacco products, Defendants restrained and suppressed research on the harmful effects of cigarettes and tobacco products; restrained and suppressed the dissemination of information on the addictive properties of nicotine and other harmful effects of cigarettes and tobacco products; and restrained and suppressed the competition, research, development, production and marketing of alternative, higher quality and safer cigarettes and tobacco products.

In furtherance of their conspiracy, the Defendants entered into an agreement to undertake joint funding and control of studies regarding the effect of tobacco products on human health, and to undertake joint funding and control over trade publications and promoting and marketing efforts. Through these and other agreements, understandings, and joint undertakings, the Defendants conspired to suppress and withhold information on the true causal relationship between tobacco products and various diseases from consumers, state and federal governments, medical and health care entities and the public at large.

The Defendants further entered into an agreement to suppress and withhold information on the addictive properties of nicotine and to manipulate the level of nicotine in tobacco products.

The Defendants also conspired to eliminate competition among themselves in the research, development, production and marketing of alternative, higher quality and safer cigarettes and tobacco products.

The Defendants' contract, combination and/or conspiracy has had the purpose and effect of restraining competition in the market for cigarettes and tobacco products in the United States, in Guatemala, and in the world market; of preventing the sale of alternative, higher quality and safer cigarettes and tobacco products; of artificially inflating the demand for Defendants' cigarettes and tobacco products; of erecting barriers to competition and entry into the market and protecting the structure of the market; of causing the suppression of information that would otherwise have affected consumer and regulatory behavior; and of causing millions of persons to purchase cigarettes and tobacco products when they otherwise would not have done so. The natural effect of the conspiracy has been to wrongfully increase the Defendants' profits, restrain and suppress competition in the research, development, production and sale of alternative products and standardize the tobacco products manufactured and sold in and through Guatemala and the United States, in Guatemala and around the world.

The contract, combination and/or conspiracy also increased tobacco-related illnesses and associated health care costs and artificially suppresses research into and treatment of tobacco-related illnesses. A foreseeable and necessary consequence of the Defendants' contract, combination and/or conspiracy has therefore been the cost of medical care for users of the Defendants' products suffering from tobacco-related illnesses. These medical care costs are inextricably intertwined with the injury the Defendants sought to inflict on competition in the market for tobacco products and flow directly from the conspiracy to suppress and withhold product information and suppress competition for alternative, higher quality and safer cigarettes and tobacco products.

The Defendants' contract, combination and/or conspiracy has accordingly resulted in a substantial injury to the business and property of Guatemala's consumers, who would not have purchased cigarettes for the same price and in the same quantity in the absence of Defendants' contract, combination and/or conspiracy and would not have suffered tobacco-related illnesses and associated health care costs.

The Defendants' contract, combination and/or conspiracy has also caused a substantial injury to the business and property of Plaintiff, for the Defendants' conduct has resulted in a substantial increase in the cost of medical care for Plaintiff and the residents of Guatemala. Plaintiff has been required to bear most, if not all, of these increased costs. Plaintiff's injury is not a form of compensation for personal injuries suffered by smokers. It is a separate injury to the Plaintiff's property and is wholly distinct from the harms suffered by individuals.

Unless enjoined from doing so, Defendants will continue to engage in a contract, combination and/or conspiracy in violation of 15 U.S.C. S 1 et seq., and the Plaintiff will continue to suffer substantial injuries to its businesses and property as a direct result of the Defendants' anti competitive activity. Plaintiff is entitled to bring this action and to recover herein actual damages, the costs of bringing this suit, and reasonable attorney's fees pursuant to 15 U.S.C. SS 15(a) and (b)(1).

14.

RESTRAINT OF TRADE IN MARKET FOR HEALTH CARE TO

WITHHOLD NECESSARY MEDICAL INFORMATION

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

Beginning at a time uncertain, but at least as early as the 1950s, and continuing until the present date, Defendants entered into a contract, combination and/or conspiracy in unreasonable restraint of trade and commerce in the market for health care in Guatemala and in the United States in willful and/or flagrant violation of 15 U.S.C. S 1 et seq.

Plaintiff is a participant in the market for health care in Guatemala due to its extensive provision of health services.

The Defendants entered into a contract, combination and/or conspiracy to restrain and suppress research and other scientific and medical information on tobacco-related illnesses and the addictive properties of nicotine and other harmful effects of cigarettes and tobacco products by agreeing to undertake joint funding and control of studies regarding the effect of tobacco products and alternative tobacco products on human health and to undertake joint funding and control of the publication and promotion of the results of these studies. Defendants also agreed to suppress, distort and neutralize valid independent scientific and medical research into the cause and treatment of tobacco-related illness.

Through these and other agreements, understandings and joint undertakings, the Defendants suppressed and withheld information on the true causal relationship between tobacco products and various diseases, the addictive properties of nicotine and Defendants' manipulation of the level of nicotine in tobacco products from Plaintiff, the residents of Guatemala, medical researchers, and other medical and health care providers and payors.

The Defendants' contract, combination and/or conspiracy had the express purpose and effect of restraining, suppressing and withholding information necessary to medical care researchers, providers and payors so that the costs of health care for tobacco-related illnesses continued to be borne by health care providers and payors, such as Plaintiff, and to prevent assumption of these costs by Defendants.

As a direct and proximate result of the Defendants' agreement, contract, combination, and/or conspiracy, health care providers and payors, such as Plaintiff, were and are injured in their business and property by, among other things, having to provide or pay for the health care costs of persons with smoking-related diseases without being reimbursed by Defendants. Plaintiff's injury is not a form of compensation for personal injuries suffered by smokers. It is a separate injury to the Plaintiff's property and is wholly distinct from the harms suffered by individuals.

Unless enjoined from doing so, Defendants will continue to engage in a contract, combination and/or conspiracy in violation of 15 U.S.C. S 1 et seq., and Guatemala will continue to suffer substantial injuries to its business and property as a direct result of the Defendants' anti competitive activity. Plaintiff is entitled to bring this action and to recover herein, actual damages, the costs of bringing this suit, and reasonable attorney's fees pursuant to 15 U.S.C. SS 15(a) and (b)(1).

15.

RESTRAINT OF TRADE IN MARKET FOR CIGARETTES

AND OTHER TOBACCO PRODUCTS WITH PURPOSE

TO AFFECT MARKET FOR HEALTH CARE

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

Beginning at a time uncertain, but at least as early as the 1950s and continuing until the present date, Defendants entered into a contract, combination and/or conspiracy in unreasonable restraint of trade and commerce in the market for cigarettes and tobacco products to eliminate competition among themselves and to suppress or eliminate competition from others in the research, development, production and marketing of alternative, higher quality and safer cigarettes and tobacco products.

In furtherance of this contract, combination and/or conspiracy, and as a necessary step in effectuating its anti-competitive ends, Defendants suppressed, distorted, neutralized and opposed dissemination of valid scientific and medical information and research concerning the health effects and addictiveness of tobacco products necessary to health care providers and payors, such as Plaintiff, as well as information necessary to judges, legislators, and regulators and the public around the world.

Such actions were taken with the express purpose and effect of imposing payment of the costs of medical care for tobacco-related illnesses on health care payors, such as Plaintiff, and preventing the assumption of those costs by Defendants.

As a direct result of this contract, combination and/or conspiracy, health care providers and payers, such as Plaintiff, were injured in their business and property by, among other things, having to provide or pay for the health care costs of persons with smoking-related diseases without being reimbursed by Defendants through the civil justice system, the tax system or other regulatory mechanisms. Plaintiff's injury is not a form of compensation for personal injuries suffered by smokers. It is a separate injury to the Plaintiff's property and is wholly distinct from the harms suffered by individuals.

Unless enjoined from doing so, Defendants will continue to engage in a contract, combination and/or conspiracy in violation of 15 U.S.C. S 1 et seq., and Guatemala will continue to suffer substantial injury to its business and property as a direct result of Defendants' anti competitive activity.

16.

RESTRAINT OF TRADE IN VIOLATION OF

D.C. CODE S 28-4502

The plaintiff realleges and incorporates herein the foregoing allegations of this Complaint.

For the reasons explained with respect to the federal antitrust laws, the Defendants have engaged in a contract, combination, and conspiracy in restraint of trade of trade or commerce, part of which is within the District of Columbia, in violation of D.C. Code S 28-4502.

Defendants' contract, combination, and conspiracy in restraint of trade has caused substantial injury to the business or property of Plaintiff, as a direct result of Defendants' anti-competitive activity. Plaintiff's injury is not a form of compensation for personal injuries suffered by smokers. It is a separate injury to the Plaintiff' property and is wholly distinct from the harms suffered by individuals.

VIII.

DAMAGES

212. Plaintiff's damages greatly exceed the minimum jurisdictional limits of this Court.

IX.

PRAYER FOR RELIEF

213. WHEREFORE, Plaintiff prays for relief and judgment against the Defendants, jointly and severally as follows:

- Requiring Defendants to pay restitution;

Awarding damages and compensation to Plaintiff for all past and future damages, including but not limited to all past and future health care expenditures for diseases and illnesses associated with tobacco products;

Awarding threefold the actual damages the Plaintiff has sustained, and will sustain, as a result of violations of D.C. Code S 28-4502 and S28-4508, as alleged herein.

Awarding threefold the actual damages Plaintiff has sustained, and will sustain, as a result of violations of the Racketeering Influenced and Corrupt Organizations Act alleged herein;

Declaring that Defendants have violated the provisions of the Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C.A. S 1962;

Imposing all appropriate equitable and injunctive relief, including but not limited to disgorgement of Defendants' profits from their activities in Guatemala;

Awarding punitive or exemplary damages;

Ordering pre- and post judgment interest, and all costs as provided by law;

Awarding Plaintiff reasonable attorneys' fees and costs; and

Granting such other and further relief as the Court deems equitable, just and proper.

X.

JURY DEMAND

Plaintiff demands a trial by jury for all matters triable by jury.

Respectfully submitted,

  By: _________________________________

Lic. Acisclo Valladares Molina

Attorney General

Republic of Guatemala

and

  By: _________________________________

George M. Fleming

Washington D.C. Bar No.191668

FLEMING, HOVENKAMP & GRAYSON, P.C.
Mark A. Hovenkamp
Texas Bar No. 10059820
Andres C. Pereira
Texas Bar No. 00794440
Steven C. Arnold
Texas Bar No. 00796139
D'Lisa R. Simmons
Texas Bar Number: 18367390
1330 Post Oak Boulevard, Suite 3030
Houston, Texas 77056
Telephone No.: (713) 621-7944
FAX No.: (713) 621-9638
E-Mail: george_fleming@fhg-law.com
1-800-654-7139

Howard Rubinstein
Law Offices of Howard Rubinstein
Texas Bar No. 17361900
3103 Harrisburg
Houston, Texas 77003
Telephone No.: (713)224-7200
FAX No.: (713)228-2324
E-Mail: howardr@pdq.net

Fleming, Hovenkamp & Grayson, P.C.
1330 Post Oak Boulevard, Suite 3030
Houston, Texas 77056-3019
(713) 621-7944 or 1-800-654-7139
fax (713) 621-9638